When considering a tenant; you will want to ask the right questions. The most important being their ability to pay rent. If a tenant can’t afford to pay you rent or if they don’t make a enough to cover rent plus other expenses; then run! Ideally, you should find a tenant that’s income is 60% more than the rent. In other words… no more than 40% of their income should go to rent.

Before accepting a tenant you will want to do a thorough check to if they have any past problems. Of course the big question relates to financial history; but don’t overlook other factors such as criminal history and address history.

The RPA has a free rental agreement that you can use to help get the basic info: http://www.rentalprotectionagency.com/uploads/pdfs/RentalApplication.pdf

Personally I stick with the Rental Protection Agency’s tenant screening system to verify tenants. One thing I really like about the RPA tenant screening packages is that they include an address history. This can quickly show you hidden problems that a typical background check or financial check would miss. I like to see what kind of move patterns the tenant has had in the past. If I see a history of moves every 3 to 6 months then I know that the tenant will most likely only stay for 3 to 6 months in my rental. By the way… just because you have a 1 year lease agreement doesn’t guarantee the tenant will stay. People that have these short move patterns are usually hiding something. It might be problems with paying rent, or legal issues, or problems with neighbors, etc. If the move history shows lots of moves in short periods of time it can be a big red flag that maybe they have other problems that are unknown.

I think most landlords overlook the whole address history part of the tenant screening process. But, for me its one of the biggest factors I consider. Filling vacancies is one of the biggest cost you can have as a landlord. Each time a tenant moves you will probably have to clean, paint, repair, and market all over again. Lowering your vacancy rate can help keep your rental profitable. (No matter how big or small your property is)

Here is a link to the RPA tenant screening system: http://www.rentalprotectionagency.com/tenant-screening.php
I always buy the $29.95 package per each applicant. Oh and by the way… ONLY run background checks on tenants when you have done all the other checks. I make it a policy to have the tenant screening report be the last formality. Otherwise, you will waste a lot of money on background checks. The general rule of thumb is to do the background check when you’re ready to rent to the applicant.

Best of luck to you. Welcome to the world of property management. You’ll do fine!